We've now published a Decision impact statement (DIS) in response to the Full Federal Court's favourable decision in Commissioner of Taxation v Cheung [2026] FCAFC 75.
In summary, the court found that the amounts Mr Cheung received from his family's supermarket business in Vanuatu between 2005 and 2015 were assessable income and subject to tax. They were not tax-free family gifts. The court concluded that Mr Cheung failed to provide sufficient evidence to demonstrate the money was a gift.
While Mr Cheung received this money as an individual, the court stated in its decision that a taxpayer would need to produce coherent, consistent, corroborated and complete records. Without these, it's difficult to prove funds are genuine gifts and not undeclared income.
The DIS is open for comment until 4 December 2026. You’re invited to provide any feedback according to the instructions in the statement.
Understanding gifts and tax
A gift you receive from overseas is treated the same for tax purposes as if it were a gift from an Australian resident: you generally don’t need to declare it.
However, a cash gift may be taxable if you receive it as part of a business-like venture or income-earning activity.
Records needed
If you receive overseas money from family under an informal arrangement, it’s your responsibility to keep clear, original records and documentation showing that the funds are genuine gifts or loans. If you can't demonstrate the nature of the funds, we may treat them as assessable income and subject to tax.
See Gifts or loans from related overseas entities for a list of documents you need to keep.
Some documents we expect you to keep include:
- loan agreements
- bank statements
- written confirmation of gifts at the time of receipt
- accounting records proving how the loan was used
- financial records from the donor or lender.
Taxpayer alert TA 2021/2 Disguising undeclared foreign income as gifts or loans from related overseas entities provides more information.
Arrangements of concern
TA 2021/2 outlines our concerns about some taxpayers attempting to disguise undeclared foreign income. If you're in this situation, we strongly recommend you read this to make sure you're avoiding these arrangements.
If these arrangements apply to you, we encourage you to:
- seek independent professional advice
- consider making a voluntary disclosure
Taking proactive steps can help reduce any penalties that may apply.
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